Todd Tresidder is known as the financial mentor, looking at smart investment strategy wealth building advanced retirement planning and entrepreneurs with a distinctive human twist. If you have heard him before you know he’s distinctively human.
Todd’s call to action is invest more, build wealth, retire early and live free and I like to live free part
Today we get to talk about the financial stuff on how to take the profits that we make and put them somewhere so that we have more money for the future.
Todd talks how to catch up on your retirement savings when you’re behind and there are so many thoughts behind that.
First of all, when you design a wealth plan the starting point is you have to have a plan to achieve wealth, because if you don’t have a plan then you’re going to produce random results.
The saying is if you don’t have a plan then somebody else has a plan for you.
Right where you become part of somebody else’s plan, so you know if you’re a contractor or you’re building the business on your own.
You’re a guy that’s moving your life. But you need to create your plan that’s going to create financial independence because it’s not enough just to make the money. There are a couple components to the equation in traditional financial planning, but we’re also going to go into nontraditional strategies here. In a traditional model you know you make the money in your work and then you have to translate it from earning income over to the asset side and there’s a inefficient ways to achieve that goal. That’s one of the things about having your own business which is one of the asset classes you can use to work with you.
You must match the asset classes to the skills resources abilities and goals you bring to the equation.
So one of things is different from the way I teach wealth planning from how most people is how traditional financial planning teaches you to go sit down your financial planner and what does a guy do? He asked you some risk profile stuff and looks at your goals and looks at your spending level and then they punch this stuff into a computer and then they print out this beautiful brochure thing glossy with you know pretty pride charts and all this stuff.
And so what people do with this is bring it home stick it on a shelf and let it collect dust. They never DO anything with it and there’s a couple problems with that. One is that it’s not actionable… there’s nothing for you to do because the premise of the entire plan is that you supposed to make as much money as you can, spend as little as you can, and shovel that savings over to your financial planner so he can stick it in a magical asset allocation so you’re rich some day in the future. Does that sound familiar?
Again, it’s just easy to call out because that’s how it’s done every day in the business and so the way I teach it’s totally different. OK what you want to do is you come to the equation with skills, abilities, resources, and goals.
You’ve got to take those and then there’s three asset classes you can use to build your wealth. This is different from how traditional financial planning teaches.
1. Traditional investing is all paper assets they can sell you like stocks bonds mutual funds insurance
Because that’s how they make their money. They’re selling you investment products. Of course that’s what is going to go into the financial plan and so the way I teach it is there’s actually three asset classes the ones that are the traditional financial planning offers are what I call paper assets, right against stocks, bonds, mutual funds, insurance that kind of stuff and so that’s what in one category called paper assets.
2 . The 2nd asset is something each contractor’s already building, which is your business / entrepreneurship
3. The 3rd asset is a real estate and income producing real estate
One of the favorite strategies I have with entrepreneurs right on the whole which doesn’t exist in most financial plans is owning the real estate that your business is housed in.
You know pretty much any accountant worth his salt would tell you that if you plan on being in business for fifteen to twenty years (most people do). If you have that kind of time frame in your business it almost always makes sense to own the property
Even if it doesn’t make sense on a straight cash flow basis, in the long term it almost always pans out on the property. That’s key in a financial plan for a contractor is that that can become a source of retirement income when you sell right because then you can lease the property. You can have the business become the leasor… you’re the owner of the business and then someonet leases it from you. That’s a way of translating money out of the business, into the air and into your personal equity side. Then what happens is fairly low risk because as long as you stay in business, you stay profitable, the business pretty much guarantees that you’ll be positive cash flow on the property by right.
It’s an extremely low risk way for you to begin to build wealth and the other thing that’s great about owning real estate that your business is housed in is it will usually almost always provide inflation adjusting income that you can never outlive and there simply aren’t that many assets you can say that about.
And then another aspect that makes sense. The strategy for contractors is not rocket science, right you have to become some big investment genius to do it most contractors own their home you know at least they intuitively understand how to buy a home or buy a piece of real estate and so an intuition will take you a long way on real estate.
Let me be clear … I’m not some big real estate advocate right? I’m talking about this mainly because it’s a sort of a no brainer strategy for most contractors in their wealth plan and it’s not commonly taught by financial advisors because, again, they can’t sell it to you, just as I can’t sell to you. But I’m an educator, I don’t sell investment products.
Todd Tresidder’ s call to action invest smart, build wealth, retire early, live free.
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